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Babalola advises states, LGs to upscale infrastructural development

The Honourable     Minister of State for Finance, Mr. Remi Babalola, on Thursday advised the three tiers of government to look inwards to generate sustainable resources to meet the minimum requirements and needs of their economies, particularly the infrastructural development. He gave the advice in Ibadan, Oyo State at the 2009 Ibadan Week Conference organised by the Jericho Businessmen Club at the Banquet Hall of Premier Hotel.

The minister, who was represented by his Special Assistant, Mr. Bode Agunbiade, advised the  tiers of government not to solely depend on the monthly allocations from the Federation  Account. Delivering a paper on the theme of the Conference “Infrastructural Development of  Ibadanland”, Babalola explained that the provisions of infrastructure require further  increase in government spending, especially in these modern times.

He said, “No doubt, with high expectations from Nigerians, the institutions of government  are constantly under pressure to deliver increased, as well as, improved services, and of  course, the ‘national cake’ has to be fragmented among the many units. With such  fragmentation, no unit gets fully satisfied at the end of the day.  “There is therefore the  necessity of looking inwards by States and Local Governments to generate sustainable  resources to meet the minimum requirements and needs of their economies, besides the regular  allocations from the Federation Account.” The minister, who chairs the Federation Account  Allocation Committee (FAAC), asserted that Nigeria’s oil revenue could not meet all the  numerous needs of the Nation.

Besides, he noted that the fluctuations in the international oil market and the OPEC  production levels in recent times have continued to create enormous volatility in government  revenue projections, thereby truncating development plans and projects.   “The negative  impact of ‘boom _ burst cycle’ of oil prices can only be addressed by enhancing the  internally generated revenue (IGR) profile of all tiers of governments in order to sustain  and deepen our development process.

“Currently, all tiers of government spend far more than they earn. Unfortunately, the chunk  of the earnings goes for overheads and personnel costs, with very little left for capital  projects, especially infrastructural development.

“Since 1999, both the States and Local Governments have received from the Federation Account  huge amounts of allocation running into several trillions of naira, besides internally  generated revenue. Yet the state of infrastructural development has remained, in comparison,  very poor.

“Over the years, we have treated infrastructural investments as being exclusively the  responsibility of the public domain. But there is an increasing trend worldwide, whereby  publicly provided infrastructure investments and infrastructure facilities are becoming  privatized. Indeed, over the last fifteen years, governments around the world pursued  policies to involve the private sector in the delivery and financing of infrastructure  services.” He identified Private Sector Partnership (PPP) as the best option of addressing  the country’s infrastructural gap. PPP is an arrangement whereby the private sector supplies  infrastructure assets and service that traditionally have been provided by the government.
It entails a formal collaboration between a public organization, such as the Federal  Government or a Sub_national authority, and one or more private companies generally with the  objective of procuring capital, management, technology and other resources as a means of  enhancing infrastructure service delivery.

Babalola added, “Many countries (both developed and developing) have adopted the PPP schemes  in addressing their infrastructural challenges, and our various governments must be desirous  of attracting and partnering with the private sector in infrastructure development.   “Indeed, the issue of whether to increase private participation in infrastructural  development remains a live policy issue in many African countries including Nigeria. PPP  schemes, including concessioning, would no doubt, supplement scarce public resources, create  more competitive environment and help improve efficiencies and reduce costs.”


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